BEIJING, July 9-- As the wild swings and slides of China's stock markets show signs of abating, eyes are now on the nation's decelerating growth and reform agenda.

GROWTH CONFIDENCE

The State Council, China's cabinet, stepped up on Wednesday to assure that the government had plenty of tools at its disposal to restore confidence in the economy, and the country could realize its major economic and social development targets this year.

China's economy expanded 7.4 percent in 2014, the slowest rate for 24 years. This year's growth target is set at approximately 7 percent, lower than the double-digit growth of the past decades but still robust by international standards.

"Positive signs have been increasing in the last two months and structural readjustment has been accelerated," said a statement released after an executive meeting of the State Council presided over by Premier Li Keqiang.

Recent economic data has fueled hopes of a rebound after first quarter growth was posted at 7 percent, weighed down by a housing market downturn and industry overcapacity, said some private and think tank economists.

China's market demand is bottoming out with the manufacturing purchasing managers' index (PMI), a key measure of factory activity, climbing steadily and other economic indicators like electricity consumption and longer-term loans edging up in recent months, said Lian Ping, chief economist at the Bank of Communications.

The macroeconomic slowdown is expected to reverse at the end of this year or the first quarter of 2016, as moderated growth is due to domestic factors rather than external challenges, said Li Daokui, professor at Tsinghua University.

Economists held that China lowered its economic growth target to help with restructuring efforts to place more focus on higher-quality and innovation-driven growth, while the housing market in the big cities has witnessed a revival with the help of supportive monetary and fiscal policies.

Home sales in China's tier-one cities, like Beijing and Shanghai, surged 42.9 percent in the first half of this year on a yearly basis, with the uptick in tier-two cities at 16.9 percent, leading property agent Centaline revealed.

China's growth slowdown is not unexpected, the World Bank said earlier this month, adding that it was "desirable from a short and medium-term perspective," as the country prioritizes balancing reforms and managing short-term demand.

Efforts to cut heavy industry inventories, dampen unproductive risk taking in shadow banking, and solidify budget constraints for local governments will help make investment more efficient, and realign growth over the medium term. However, such reforms will depress economic activity in the short term, the global lender said in its latest China Economic Update report.

The State Council on Wednesday demanded that policies, reform measures and projects be implemented to ensure economic growth remains in a proper range, as they will promote quality growth and upgrading.

The World Bank predicted China's economy would expand 7.1 percent in 2015 and 7 percent in 2016, largely in line with its previous predictions.

Not every economic figure is positive. Consumer inflation ticked slightly higher in June while at the wholesale level, deflation remained a problem for the 40th month in a row.

Wen Bin, chief researcher with China Minsheng Bank, said this shed light on continuously weak domestic demand and that there was still room for the central bank to ease its monetary policy.

To combat the economic slowdown, China's central bank cut the benchmark interest rates four times since November and lowered banks' reserve requirement ratio twice since February.

China's cabinet Wednesday decided that more than 250 billion yuan (41 billion U.S. dollars) in misused or dormant funds should be reclaimed by fiscal bodies, and the money should be invested in underfunded areas.

Growth in China's service sector remains robust, especially in advanced services such as banking and insurance, and consumption has grown slightly faster than investment in recent years.

MARKET BLEEDING EASES

An unprecedented battery of measures to pump up the market has showed early signs of recovery and has boosted investor confidence.

Chinese shares posted a strong rally on Thursday, with the benchmark Shanghai Composite Index (SCI) leaping 5.76 percent to finish at 3,709.33 points.

The Chinese stock market was among the world's best performers earlier this year, with the SCI surging more than 150 percent within 12 months, partly fueled by margin trading, as some investors borrowed money to buy shares.

As margin traders began to unwind their positions and some investors cashed out, the market has taken a nosedive since mid-June with the index losing more than 30 percent as of Wednesday from the recent peak on June 12, and many shares' value had halved.

Measures over the past weeks to bolster market confidence included major brokerages putting their own capital into the market, rules changing to allow pension funds to own stocks, and a trading cap on stock index futures.

The state asset regulator ordered centrally administered state-owned enterprises (SOEs) to hold shares in their listed companies amid "abnormal market volatility", and the regulator eased rules for insurance companies to step up to the plate to invest more in blue-chips.

Government agencies on Thursday continued to make concerted efforts to halt the stock rout, with the police joining the securities regulator to investigate "malicious short selling."

Different from advanced economies, many investors in the Chinese stock market are individuals. Some argue that the recent correction will be a lesson for them and will only help to establish a more rational market.

The recent "perfect storm" will teach investors about risk and reward as well as value-oriented investment, banking giant HSBC said in a recent research note.

After the market correction, the equity market is likely to stabilize off the back of the long list of supportive moves, and many shares will be too cheap to ignore, analysts have said.

"Following weeks of decline, investors' willingness to further sell has declined and the SCI is expected to bottom out gradually," said Chen Jianhua, an analyst with Yintai Securities.